The rupee today surged by 20 paise to end at a one-week high of 68.57 against the US dollar buoyed by a steep fall in crude prices and a strong rally in equity markets.

Forex market witnessed a revival in sentiment after crude prices plunged the most in two years on supply glut worries after Libya said its four oil export terminals were reopening, ending a standoff that had closed most of its oil output.

The benchmark Brent crashed over 7 per cent yesterday before regaining some lost ground in early Asian trade at USD 74.80 a barrel.

The Indian currency gained further ground even as the US dollar was strong in global markets amid trade war concerns between the US and China.

It touched a high of 68.50 in early trade.

The home currency also made a strong comeback against the British pound, euro and Japanese Yen.

A strong rally in equities buoyed by optimism about robust corporate earnings season also a progressing monsoon also lent support to the rupee.

The BSE- Sensex closed at a fresh lifetime high of 36,548.41, while Nifty reclaimed the significant 11,000-mark.

Foreign investors remained net sellers in the stock markets as they sold shares worth Rs 742 crore on net basis, according to the provisional data.

The rupee opened higher at 68.67 against last close of 68.77 at the Interbank Foreign Exchange (forex) market on sustained selling of the greenback by banks and exporters.

It later marched ahead to hit a session high of 68.50 in mid-afternoon deals before ending at 68.57, revealing a healthy gain of 20 paise, or 0.29 per cent.

The domestic bond market also rallied for the second day and the 10-year benchmark yield tumbled 9 bps to 7.78 per cent from 7.87.

Globally, the US dollar rose to a six-month high against the Japanese yen after the US inflation data bolstered the case for more Federal Reserve rate hikes this year. The dollar index, which measures the greenback's value against basket of six major currencies, was down at 94.50.

In the cross currency trade, the rupee bounced back against the pound sterling to finish at 90.44 per pound from 91.11 and recovered against the euro to end at 79.88 compared to 80.56 yesterday.

The pound sterling remained bearish ahead of Brexit white paper, which triggered resignations of high profile UK ministers, including David Davis and Boris Johnson, is set to be published later in the day.

The local unit also strengthened against the Japanese yen to settle at 60.92 per 100 yens from 61.83 earlier.

The benchmark six-month forward premium payable in November fell sharply to 111-113 paise from 115-117 paise and the far-forward May 2019 contract also slumped to 257.75-259.75 paise from 264-266 paise.